MAS Imposes Over $20M in Penalties over 18 months [Jan 2022- June 2023]

The Monetary Authority of Singapore (MAS) has, in its 4th Enforcement Report:-

• Recorded more than $20 million in penalties.
• Along with its enforcement priorities for 2023-2024.

Among other measures, the report details high-profile enforcement actions against four financial institutions for insufficient anti-money laundering and counter-terrorist financing (AML/CFT) measures. The total in penalties is a record amount for MAS within an 18-month period – in contrast, the 2020-2021 report recorded just over $2.7 million.

Ms Peggy Pao, Executive Director of Enforcement for MAS, said:-

•  “In this reporting period (January 2022 to June 2023), we took robust action … to uphold the integrity and reputation of Singapore as a trusted financial centre,”
•  “We will continually refine and enhance our processes to ensure that we remain well-equipped to deliver effective enforcement outcomes.”

Severe Penalties for AML Failures and Trading Crimes

According to MAS, enforcement actions during the reporting period included:

• $7.88 million in financial penalties and compositions against firms, including banks, insurance providers, and individuals.
• $12.96 million in civil penalties for insider trading and false trading offences.
• 39 criminal convictions, including 23 prison sentences, for insider trading and fraud crimes.

Firms’ AML breaches included customer due diligence (CDD) failures, such as:

• Not sufficiently investigating activity out of line with the firm’s knowledge of their customer.
• Failing to verify a customer’s source of wealth.
• Failing to understand clients’ beneficial ownership and control structures sufficiently.
• Not performing true ongoing CDD, including failure to perform enhanced due diligence (EDD) or update client risk profiles and beneficial ownership information.

Enforcement Actions to Bear in Mind

The report highlighted two new enforcement priorities alongside the regulator’s evergreen priorities. Firms should study the whole report but take special notice of the following areas of focus:

• Digital asset ecosystem enforcement – MAS specifically mentioned its plans to introduce additional regulations into the sector to curb money laundering and terrorist financing. It pointed out the cross-border nature of its upcoming enforcement actions and said it plans to collaborate with international authorities in future financial crime cases.
• Asset and wealth management sector focus – The regulator reiterated its intention to continue close supervision in this sector in line with its recent actions. For example, in July 2023, it proposed a rule that would close AML loopholes by standardising licensing exemption criteria for single-family offices (SFOs) – firms responsible for helping individual families manage their wealth. According to the criteria, firms would have to be family-owned and subject to more uniform AML/CFT oversight to be exempt from having to apply for a capital markets services (CMS) license under the Securities and Futures Act (SFA).

Sources

https://www.mas.gov.sg/-/media/mas/news-and-publications/monographs-and-information-papers/4th-enforcement-report.pdf

https://www.mas.gov.sg/news/media-releases/2023/mas-reports-robust-enforcement-outcomes-and-enhances-disclosure-of-statistics